skills shortages tcm77-160052

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S k i l l s s h or t a g e s i n s k i l l ed c on s t r u c t i on a nd

m e t a l t r a d e o c c u p a t i on s

March 2004 Labour Market trends 103

Skills shortages in skilled construction and metaltrade occupations

By Yolanda Ruiz, Labour Market Division, Office for National Statistics

● More than half of workersin construction and metal tradeshold vocational qualifications atintermediate level.

● Vacancies for these trades are highlyrelated to skills shortages in the potentiallabour supply and are becomingincreasingly difficult to fill.

● Earnings for these occupationsincreased in 2003 at a higher ratethan average.

● In the past three years theduration of unemployment in thesegroups has decreased by more thanaverage.

● Usual hours of paid overtime havebeen at least two hours higher forthese groups than average.

● There is no clear evidence of whether skills shortages in these

occupations may be long-term andlinked to structural changes in theeconomy,or short-term and linked toeconomic business cycles.

Key pointsUsing data from various sources, this article discusses the issue

of skills shortages in key building trades.

Introduction

RECENT REPORTS by national

training organisations and in the media

have expressed concern about skill

shortages within the UK labour market

in certain craft-based occupations suchas plumbers, electricians and building

workers. Although it might seem

reasonable to assume that the skill

deficiencies are most likely to be found

in the highest skilled groups, the

shortages are actually most acute in

specific occupations requiring certain

vocational skills, especially in the

construction and metal trades.

From the standpoint of the economy,

it is not surprising that these groups

have generated so much attention:construction and building trades provide

the essential infrastructure required by

all other sectors in the economy, while

metal and electrical trades play an

important part in driving forward

technological change and developmentin the UK economy. The public also has

an interest in these occupations because

of their necessity to domestic projects,

and is naturally concerned about any

increase in the number of tradesmen

who cannot fulfil the required standards.

The first part of this article describes

the main characteristics of these

occupational groups. The second part

describes the benefits and shortcomings

of the current and future use of

qualifications to measure the vocationalskills that those groups represent. The

National Statistics feature



104 Labour Market trends March 2004

Skills shortages in skilled construction and metal trade occupationsNational Statistics feature

rest of the article analyses whether there

is enough evidence to suggest that there

are shortages in such skills. The article

brings together analysis from the

demand and supply sides of the

economy, building on the more generaland segmented literature on the topic.

The term ‘skills shortage’ is used by

different authors to refer to different

dimensions of the term ‘skill’ (see

Box 1). Some studies tackle skills

shortages by analysing the unfilled

demand for some occupational groups,

while others concentrate on the supply

side of the market by analysing evidence

of the stock or lack of relevant skills in

the current and potential workforce. The

emphasis in this article is on the shortageof individuals with the required skills in

the potential workforce, because this

definition relates better to mismatches

between labour supply and demand.

From the demand side, the article

looks at recent data on vacancies and

earnings; from the supply side it looks at

the employment situation of the people

in those occupations and the amount of

hours worked. All these issues can,

however, be seen from both a demand

and a supply perspective, so theemphasis is always made on the

investigation of possible mismatches.

Skilled trade occupations

For the purposes of official statistics,

occupations are classified using the

Standard Occupational Classification

(SOC) 2000 (see Box 2). The

occupational group that is mostly

associated with vocational occupations

at intermediate level is skilled tradesoccupations. This group is also

particularly characterised by having the

highest proportion of self-employed

men, and one of the lowest proportions

of non-UK nationals. Interestingly, it

also happens to have been, throughout

the past ten years, one of the most stable

groups in numbers, male/female ratios

and distribution by qualification level,

despite the definitional changes as a

result of the introduction of SOC2000.

Table 1 shows that the skilled tradesoccupations group involves very

different trades. This article focuses on

skilled metal and electrical trades and

skilled construction and building trades,

since these subgroups embrace the

occupations of greatest interest. These

groups have the highest proportions of

men, and the most constant trend in the

average age of workers.

Measurement of skillsQualifications are usually used as a

proxy for skills. They are easier to use

and possibly more objective than a fully

developed complex measure of the

stock of skills of each individual. It is

generally recognised that this method

has its limitations, but the general

tendency among young people to place

a higher emphasis on qualifications

may make this measure increasingly

more accurate. National Vocational

Qualifications (NVQs) were introducedin 1989 as an attempt to promote and

measure competencies in a wide sense,

including experience-based learning at

work.

Evidence from several studies (Lind

Frogner (2002), Skills Task Force

(1999), ILO (May 2003)) shows that

while the proportion of workers holding

qualifications has indeed increased

substantially over the years, especially

among the young, this has been largely

due to academic qualifications.Vocational qualifications in general

have increased only slightly.

However, according to Labour Force

Survey (LFS) data, the skilled trade

subgroups under discussion here are the

only groups in which half the

population hold NVQ3 or equivalent as

their highest qualification. This level of

qualification is generally seen as

representing the intermediate skills

level. An increase in the numbers of

trade apprentices may have contributed

to this. This may indicate that whilethe general tendency to become

qualified is not shared by all vocational

occupations, it seems to apply to the

Box 1 What are ‘skills shortages’?

The term ‘skill’ can be defined in various ways.● An earlier article defined it as the ability to perform a task to apredefined level of competence (see pp17-27, Labour Market Trends, January 2002).

● In the Standard Occupational Classification (SOC) (see Box 2), twoaspects of the definition of skill are distinguished: skill level is defined interms of complexity of the tasks and duties to be performed; skillspecialisation is defined as the field of knowledge required forcompetent, thorough and efficient conduct of the tasks.

● Skill levels can be linked to the length of time deemed necessary for aperson to become fully competent in the job, related in turn to the timetaken to gain necessary formal qualifications or the required amount of work-based training.Within the SOC, four skill levels are defined (seeSkills Task Force (December 1999) for more details):

1.equates with the competence associated with general education;2. covers all of the knowledge provided with general education but with a

longer period of work-related or work experience;3. associated with a period of post-compulsory education but not to

degree level.This level is usually referred to as the ‘intermediate’ level;and4. normally requires a degree or equivalent period of relevant work

experience.● Skills are also often divided into transferable (can be used across largenumbers of different occupations) and vocational (specific occupationalor technical skills needed to work within an occupation).

‘Skills shortages’ are understood as a shortage of individuals with therequired skills in the external labour market (potential workforce) – different to ‘skill gaps’ or deficiencies in the skills of an employer’s currentworkforce that require internal training. Even though they relate todifferent problems some authors treat them indiscriminately as a general‘lack of skills’.



skilled construction and metal trade

subgroups.

Moreover, although under half of the

people working in skilled trades are not

qualified, LFS data show that in 2003

the proportion of workers in skilled

metal and electrical trades and skilled

construction and building trades that

were aged 50 and over and had no

qualifications was nearly twice that of

those who were qualified in that age

group, while the converse was true for

16 to 34-year-olds.If more than half of workers in these

occupational groups hold NVQ3

qualifications, and younger groups are

more likely to obtain qualifications than

those approaching retirement age, the

use of qualifications and the NVQ

system may become an increasingly

good measure of the skills within these

occupational groups. This provides a

very useful link to study the mismatches

between the demand and supply of such

skills in the UK labour market.

Demand

Analysis from the demand side looksat the number and duration of vacancies

for construction and metal trades

occupations, and the change in their level

of earnings, since these suppose a cost to

the employers and it is in their power to

increase or decrease them.

VacanciesThe data used here to study vacancies

is mainly from the Employers Skill

Survey (ESS) and Jobcentre Plus (see

technical note for details on

the information they provide),

complemented with some results of

analyses produced by National Training

Organisations.

The ESS provides a more

comprehensive picture of vacancies than

the vacancy series produced by Jobcentre

Plus and it identifies explicitly those

vacancies related to skill shortages. It alsoprovides a check on the extent to which

vacancies reported to Jobcentres are

representative of the whole economy. For

July 1999 data, the ESS estimated that

Jobcentre Plus covered less than half the

vacancies for establishments with five or

more employees, although this varied

between occupations. For the skilled

trades occupations group it covered 56

per cent of the vacancies. The ESS is,

however, limited in showing trends over

time because it is not a standard surveyrun every year, so the data are not

immediately comparable at all levels

between surveys.

Jobcentre Plus data, on the other hand,

provide information on the duration of

vacancies, and data are comparable

between years, enabling time-series

analysis. The data also provide

information on self-employed vacancies

that require jobholders to pay their own

tax and National Insurance contributions.

Vacancies by occupationAn earlier article, which used data

from the 2001 ESS (see pp17-27,

Labour Market Trends, January 2002),

found that 56 per cent of all skill-

shortage vacancies were in

professional, associate professional,

and skilled trades, although these

occupations accounted for only 34 per

cent of all jobs.

Similarly, analyses on the updated

ESS2002 (DfES, 2003) contradict the

assumption that vacancies are likely tobe more prominent for the mostly highly

qualified groups: the three most

highly skilled occupational groups




Skills shortages in skilled construction and metal trade occupations National Statistics feature

Box 2 Change from SOC90 to SOC2000

In June 2000 ONS published the Standard Occupational Classification

(SOC2000), which is a revision of the classification introduced in 1990(SOC90). Most of the revisions were made to incorporate new occupationswhich did not exist in 1990 or to tighten the definitions of others. Otherchanges were linked to the upgrading of certain skills in comparison withothers. It utilises four levels of aggregation: 9 major, 25 submajor, 81 minorand 353 unit groups.These are represented numerically by one, two,three orfour digits.

The major group structure is designed to bring together occupationalcategories which are similar in terms of the qualifications, training, skills andexperience with which they are generally associated (see Box 1). The skillspecialisation criterion distinguishes submajor groups of occupations withineach skill level.

There is no exact correspondence between SOC90 and SOC2000 at anylevel, most of the major groups have been renamed and all have a different

composition.Within major group 5,‘skilled trade occupations’,many job titleswere moved to group 8 (plant and machine operatives), and a new submajorgroup was created to place farmers from major group 1 and skilled farmworkers from major group 9.Submajor groups 52 and 53 correspond in theSOC2000 to the groups discussed in this article: skilled metal and electricaltrades and skilled construction and building trades respectively.

Presented in Table 1 are the SOC2000 trades-associated occupationalgroups at two-digit level and their mapping into SOC90.The mapping shownis the best approximation to the equivalent groups between the twoclassifications. For more detail,and to see how the changes were dealt with inthe LFS,see Beerten,Rainford and Jones (July 2001).

Mapping of SOC2000 to SOC90 for skilled trades occupationsTable

1SOC 2000 SOC 90

51 Ski lled agricultural trades 9a Other occupations in agriculture, forestry and f ishing

52 Skilled metal and electrical trades 5b Skilled engineering trades

53 Skilled construction and building trades 5a Skilled construction trades

54 Textiles,printing and other skilled trades 5c Other skilled trades

Source:Office for National Statistics



(managers, professionals and associate

professionals, typically with NVQ4/5)

do not account for the largestproportions of the total number of

vacancies. Each of the nine occupational

groups accounts for a similar proportion

to the total. Similarly, the survey shows

that hard-to-fill vacancies are not

concentrated in the three most highly

skilled major occupational groups, since

they account for less than 30 per cent of

the total. Perhaps more indicative of the

acuteness of the problem, the density of

skill-shortage vacancies in these groups

is above average, but the highest density

of all is found in the skilled trades group

where the typical qualification is NVQ3.

A report on key findings (DFES,

2004) on the latest published National

Employers Skills Survey (NESS2003)

corroborates these results, and states

that skilled trade occupations ‘stand outas having the highest share of all

recruitment problems’ by accounting

for 15 per cent of all hard-to-fill

vacancies and 18 per cent of all skill-

shortage vacancies.

In reference to the specific subgroups

of interest, skilled construction and

building trades have above average

‘intensity’ of skill-shortage vacancies

out of total vacancies. Table 2 shows a

ranking of all the subgroups according

to the intensity of the skill-shortage

vacancies out of total vacancies, and the

groups that are the subject of this article

show among the five highest. In skilled

construction trades 48 per cent of the

vacancies are due to skill-shortages, and

36 per cent in skilled metal trades,

compared with an average of 21 percent.

The analyses of ESS data also show

that the majority of establishments

reporting vacancies in skilled metal

and construction trades are mainly

concentrated in two sectors (manu-

facturing and construction respectively)

rather than scattered equally among

different sectors (see Table 3), especially

for construction trades. This provides a

crucial link between occupations and

industry for these particular groups

which is not shared

by the majority of occupations. It allows

us to complement information on

these occupations with the recruitment



Vacancies Skill-shortage vacancies

Number Rank Number Rank Intensitya Rank

Number of vacancies and skill-shortage vacancies ranked by intensity of skill-shortage vacancy;England;2001Table

2

SOC2000 occupation

Science and technology professionals 30,084 9 16,587 1 0.55 1

Science and technology associate professionals 24,502 14 12,352 3 0.50 2

Skilled construction and building trades 24,013 15 11,636 4 0.48 3

Business and public service professionals 20,957 16 9,708 6 0.46 4

Skilled metal and electrical trades 32,345 7 11,517 5 0.36 5

Leisure and other personal service occupations 24,615 13 6,134 15 0.25 6

Process,plant and machine operatives 29,597 10 7,046 11 0.24 7

Corporate managers 28,394 11 6,570 12 0.23 8

Health professionals 1,551 24 338 24 0.22 9

Managers and proprietors in agriculture and services 5,595 22 1,188 21 0.21 10

Textiles,printing and other skilled trades 18,609 17 3,753 16 0.20 11

Teaching and research professionals 16,530 18 3,327 17 0.20 12

Health and social welfare associate professionals 31,986 8 6,268 14 0.20 13

Caring personal service occupations 45,415 5 8,700 9 0.19 14

Transport and mobile machine drivers and operatives 39,764 6 7,600 10 0.19 15

Skilled agriculture trades 2,972 23 489 23 0.16 16

Business and public service associate professionals 57,094 4 9,078 7 0.16 17

Unclassified 460 26 70 25 0.15 18

Sales occupations 95,801 1 13,820 2 0.14 19

Culture,media and sports occupations 10,313 21 1,443 20 0.14 20

Secretarial related occupations 15,756 19 1,958 19 0.12 21

Administrative occupations 78,624 3 8,750 8 0.11 22

Elementary trades,plant and storage related occupations 24,705 12 2,151 18 0.09 23

Elementary administration and service occupations 84,514 2 6,309 13 0.07 24Customer service occupations 13,512 20 753 22 0.06 25

Protective service occupations 1,165 25 11 26 0.01 26

All establishments 758,871 157,556 0.21

Source: Department for Education and Skills

a Skill-shortage vacancies divided by vacancies.







difficulties experienced by the industrial

sectors they so closely represent.

Sectoral recruitment difficultiesIn this respect, according to the ESS

reports, construction and metal-working

sectors seem to be characterised by

having the relevant skills on their

existing workforce but companies

struggle to find them in the external

market.

Reports by the Construction Industry

Training Board (CITB) (2001, 2002)

corroborate these results by stressingthat, in the construction industry,

difficulties in recruitment were high in

2002, affecting 79 per cent of

participating employers – slightly above

what they had been in 2001.

Recruitment in the open market was

reported to be still relatively rare, with

the majority of staff being trained

internally to acquire the relevant skills

or being sourced from other companies.

The CITB reports also highlight a

shortage of skilled younger workers to

replace older workers, in comparisonwith other sectors where employment

increased quickly in the 1980s and

1990s (as in many service sectors). The

issue of an ageing workforce may get

worse as a result of recent regulationsthat require workers regularly to

resubmit themselves for accreditation.

Moreover, there are currently some

initiatives by the Confederation of

Construction Clients to move

incrementally to only employing fully

qualified, registered workers. These

would complement other initiatives

such as the Quality Mark Scheme,

which is aimed at protecting smaller

one-off clients (for example,

householders) from disreputablebuilders and is being piloted in some

parts of the country.

National Electrotechnical Training

(NET) reports (2002) also show

concern about recruitment problems in

the electrotechnical sector, particularly

of able young people, as current

recruitment levels are insufficient to

replace those who are due to retire in the

next few years. NET is also promoting

initiatives in this sector towards

universal qualification, such as the

requirement that every apprenticeundertakes the NET NVQ3, possibly to

discourage unqualifed tradesmen from

entering the open market.

All these initiatives aimed at

increasing the number of fully qualified

workers in both sectors indicate that in

the coming years skill shortages will be

more directly measurable in terms of

qualifications. However, they also maylead to a higher number of skill-related

vacancies unless there is an expansion

of the potential labour force, for

example by employers encouraging a

more diverse workforce. (In these

occupations, as already shown, there is

a very low proportion of women and

people from ethnic minority groups.)

Structural versus cyclical

shortagesPrecisely because of the linkage of

construction and metal trades

occupations with specific industrial

sectors, and the importance of those

sectors in the wider economy, the

shortages seen above may, at least in

part, reflect cyclical patterns.1 The

CITB reports explain that, during the

late 1980s, the Construction

Confederation’s quarterly survey

showed that four out of five

construction employers had difficultyrecruiting skilled workers until the early

1990s when this fell to almost zero with

the recession. There was a steep

increase in recruitment difficulties in

the next few years, followed by a

similar decrease in the mid-1990s as the

economy slowed down. In 1996, the

recruitment problems reappeared as the

economy got better, and they have

remained until today.

Data from Jobcentre Plus show an

increase in the in-flow of notified

vacancies for skilled metal and

construction trades in June 2003

(compared with the in-flow in June

2002) that was higher than in other

occupations. The in-flow was 6.4 per

cent higher than in the previous year for

metal trades and 7.5 per cent higher for

construction occupations, compared

with an increase of 0.9 per cent for the

remaining average (the average of all

occupation subgroups excluding

electrical and metal trades and

construction trades). This could beindicative of current skill shortages,

although comparison with previous

years to check whether it could be a

Proportions of establishments reporting vacancies in selected occupations byindustry; England; 2001

Table

3Per cent

Skilled metal and Skilled construction

electrical trades and building trades

Industry

Agriculture and fishing 0 1

Mining and quarrying 0 0

Manufacturing 44 7

Electricity,gas and water supply 0 0

Construction 15 79

Wholesale and retail 18 3

Hotels and restaurants 1 0

Transport and communications 5 0

Finance 0 0

Business services 13 8

Public administration 0 1Education 1 0

Health and social care 1 1

Other services 2 1

Total 100 100

Source: Department for Education and Skills





more structural problem is difficult due

to the discontinuities of the data.

For previous years, though, it is

possible to analyse the mean duration in

weeks of the stock of vacancies (only

available up to 2000). It shows that theaverage duration of vacancies for

skilled metal trades has been

consistently about one week above

average (two since 1998), indicating

relatively permanent recruitment

difficulties for those occupations.

However, for skilled construction trades

duration is one week below average, so

the recruitment difficulties could be of a

more temporary nature, according to the

cyclical nature of the work.

Data on self-employed vacancies isparticularly relevant in the analysis of

construction and metal trades because,

as mentioned above, they are generally

characterised by a high proportion of

self-employed workers. The proportion

of total notified vacancies for this type

of vacancy is very low on average

(excluding the groups under analysis,

below 2 per cent). For skilled metal

trades, the proportion is only slightly

higher than average, and has been

getting closer to it. For skilled

construction trades, the proportion has

been historically much higher. The

CITB reports explain that the majority

of construction projects are carried out

by teams drawn from specialist

subcontractors that move between sites

for different projects, so that self-

employment is now widespread across

all stages of construction.

Even though the proportion of self-

employed vacancies out of total

vacancies is relatively higher for the

construction trades, it started decreasingafter reaching a peak in 1995 (over 20 per

cent) until 1998 (when it was just over 6

per cent), and it has started increasing

Source: Jobcentre Plus administrative system

0

2

4

6

8

10

12

14

16

18

20001999199819971996199519941993

Figure Average duration of self-employed unfilled vacancies; Great Britain;

1993 to 2000a 1Weeks

a Data are for April of each year.Note: occupations are coded according to the Standard Occupational Classification 2000.

All other occupations

Skilled engineering trades

Skilled construction trades

Skilled metal and electrical trades Skilled construction and building trades All other occupation groups

Average Annual Average Annual Average Annual

weekly pay (£) increase (%) weekly pay (£) increase (%) weekly pay (£) increase (%)

Average gross weekly paya for people in full-time employment holding NVQ3 as highest qualification;United Kingdom;spring quarters 2001 to 2003

Table

4

2001 389 359 393

2002 410 5.4 372 3.6 394 0.3

2003 426 3.9 395 6.2 401 1.8

Source: Labour Force Survey

a Excluding overtime.

Source: Jobcentre Plus administrative system

-60

-40

-20

0

20

40

60

80

2000199919981997199619951994

Figure Increase in average duration of self-employed unfilled vacancies;

Great Britain; 1994 to 20002Per cent

a Data are for April of each year.Note: occupations are coded according to the Standard Occupational Classification 2000.

All other occupations

Skilled engineering trades

Skilled construction trades







slightly again since. Part of the decrease

after 1995 is linked to the fact that Inland

Revenue tightened up the rules on who

can be registered as self-employed, and

that has reduced numbers. However, part

of the decrease could also follow from

the cyclical nature of the work available

for these occupations, particularly those

in the construction trades, in which the

self-employed group would be the mostquickly affected.

The mean duration of self-employed

unfilled vacancies is substantially lower

for both occupational groups than for

the average (see Figure 1), but has been

increasing at a rate generally above the

average (see Figure 2) so the gap has

been getting closer with time. This

could indeed be indicative of increasing

difficulty in companies to fill vacancies

destined for the self-employed in these

vocational groups. But it could alsoindicate that the self-employed might be

becoming more specialised in domestic

trade, possibly because they may lack

the specific qualifications increasingly

required in order to work in a company

as self-employed. The increasing

difficulties in filling the self-employed

vacancies for these occupations may

explain why the proportion of this type

of vacancy is low in comparison with

the high number of self-employed

workers in these occupations.

IncomeThe recruitment difficulties and

evidence of certain skills shortages

discussed above may lead to an increase

in the salaries or incomes for these

occupations in comparison with other

occupations with the same skill level, in

order to attract more people and retain

the current workforce. There are two

main sources of earnings with an

occupational breakdown in the UK: the

LFS and the New Earnings Survey

(NES) (see technical note). In order toease comparison between the two

sources, data are shown for full-timers

only. For full-time employees,

Wilkinson (1998) argues that the NES

should be a more reliable source of data.

Considering the past five years, both

the LFS and the NES show a very

similar picture: gross weekly pay

excluding overtime is higher for skilled

metal than for skilled construction

trades, but both are below the average of

the rest of occupations.In terms of rate of change of pay

(which is more indicative of skills

shortages), however, LFS data for 2003

show an increase in all groups, but pay

in construction trades rose above the

average, while for metal trades it rose

below average. By contrast, NES data

for that year show that earnings

increased in both groups at a higher rate

than the average (around 5 per cent

compared with around 2 per cent).

Given the fact that the NES is

considered the most reliable source of data for full-time employees, this may

be indicative of current skill shortages

within these occupational groups.

Added to this, when only those

employees in the LFS holding NVQ3

as their highest qualification are

considered, gross weekly earnings in

2003 were increasing for skilled metal

and electrical trades at a rate above2 percentage points higher than the

average, and for skilled construction

and building trades at a rate above

4 percentage points higher (see Table 4).

However, none of the surveys

described above cover the income of the

self-employed, and there is in fact no

reliable source of income by

occupational group at the two-digit

level on that.

Supply

Information from the demand side

can be complemented by analyses from

the supply side, by looking at the

employment conditions of the current

workforce in the occupations in

question, including the self-employed,

and the amount of hours they work. The

resulting picture might encourage or

discourage other potential workers, and

determine the labour supply in the

future.

UnemploymentIt seems reasonable to believe that

skills shortages in the occupational groups

of interest here would lead to a better

employment situation in these groups in

comparison to other occupational groups

at the same skill level.

A look at the past ten years of the

unemployment rate by occupation

(according to the last job) using LFS data

shows that the percentage change forthese two groups has been generally

below the average. On occasions,

however, it has been above the average

due to the much greater ups and downs

shown for those occupations, indicating a

greater sensitivity to the economic cycles.

However, in the past three years the

rate for skilled construction and

building trades seems to have been

substantially higher, and out of line with

previous cyclical patterns. The problem

is that unemployment figures are for the

survey reference week only, and maynot be very appropriate in the analysis

of occupations where, as we have seen

above, the work is increasingly being


Note: occupations are coded according to the Standard Occupational Classification 2000.

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

200320022001

Figure Average duration of unemployment; United Kingdom; spring quarters

2001 to 20033Years

All other

occupationgroupsSkilled constructionand building trades

Skilled metal and

electrical trades





contracted out on a project basis and

therefore the amount of ‘frictional’2

unemployment may be higher in the

more recent years. The duration of

unemployment may therefore be a

better indicator. Figure 3 shows that inthe past three years the duration of

unemployment in these groups has

indeed decreased by more than for the

average (by 23 per cent for skilled metal

and electrical trades, and 28 per cent for

skilled construction and building trades

compared with 13 per cent for the rest).

Figure 4 shows that this is due to a more

pronounced increase within these

groups of the proportion of unemployed

for less than three months at the expense

of those unemployed for more thanthree months.

Hours workedAnother possible effect of skill

shortages is to increase the workload of

existing workers. An analysis of the

basic (that is, excluding overtime) usual

hours worked using LFS data shows

that skilled construction and metal

workers have generally had a much

higher than average usual hours worked

in the past ten years. This could partlybe because the self-employed tend to

state a higher number of hours worked

than employees. It is, however, likely

that because of the nature of their work

the number indeed tends to be higher.

On one hand, the work is generally

project-based and may require workers

to stay away from home while the

projects last, so it is in their interests to

work longer hours. On the other hand,

the cyclical nature of the sectors in

which these occupations predominate

may lead to workers working higher

hours when the economy is booming

and less hours when there is lack of

work, without necessarily changing

their job. This would make sense,

because some of the skills acquired in

those professions are too specialised to

be easily transferable. In this respect,

2003 LFS data shows that the average

time with the current employer is in fact

higher than for the average occupation.

In terms of the average of usual hours

of paid overtime, which may be moreindicative of temporary skills shortages,

Figure 5 shows that for the past five

years it has indeed been quite a lot

higher for these vocational groups (5-6

hours for construction workers and 6-7

hours for metal workers) than for the

average (3 hours).

Conclusion

Analyses on the supply side seem to

corroborate the results from the demand

side that there are some skills shortages

in the labour market for occupations

embraced by the skilled construction

and metal skilled trades. There is,

however, mixed evidence on whether

such shortages are of a temporary nature

and related to the cyclical nature of the

sectors that they so closely represent, or

whether they are indicative of a general

0

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20

30

40

50

60

70

80

200320022001

Figure Proportions of people unemployed by duration of unemployment; United

Kingdom; spring quarters 2001 to 20034Per cent Skilled metal and electrical trades

Per cent Skilled construction and building trades

Per cent All other occupations

3 months or moreLess than 3 months

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20

30

40

50

60

70

80

200320022001



0

10

20

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200320022001







structural shortage of suitable workers

to replace the current workforce, which

may get worse as workers retire.


iFurther information

For further information,contact:

James McNair,

Room B3/03,

Office for National Statistics,

1 Drummond Gate,

London SW1V 2QQ,

e-mail [email protected] ,

tel.020 7533 6142.

ReferencesArrowsmith J.,‘Jobcentre Plus notified vacancy series’,Labour Market Trends, July 2003.

Beerten R.,Rainford L.and Jones A.,‘Changing to Standard Occupational Classification (SOC)2000 – dual coding on the Labour Force Survey’,Labour MarketTrends, July 2001.

CITB,Construction Workforce Development Planning Brief 2001-2005 (2001).

CITB,Employers Skill Needs Survey (autumn 2002).

DfES, An Assessment of Skill Needs in Construction and Related Industries (2000).

DfES,Employers Skill Survey.New Analyses and Lessons Learned (March 2003).

DfES,National Employers Skills Survey 2003: Key findings (2004).

International Labour Office,‘Learning and training for work in the knowledge society’, International Labour Conference,Report IV,Geneva (June 2003).

Lind Frogner,M.,‘Skills Shortages’, Labour Market Trends,January 2002.

National Electrotechnical Training,‘Skills and Labour Market Survey for the Electrotechnical Sector’, February 2002.

National Electrotechnical Training,‘Framework Document for the Electrotechnical Modern Apprenticeship through Skillseekers’,February 1999.

National Institute of Economic and Social Research and Institute for Employment Research,‘Employers Skill Survey.New Analyses and Lessons Learned’ (March2003).

Skills Task Force,‘Intermediate Level Skills – How are they changing?’, Research Paper 4 (September 1999).

Skills Task Force,‘SOC 2000.Redefining Skill. Revision of the Standard Occupational Classification’,Research Paper 19,December 1999.

Wilkinson,D.,‘Towards reconciliation of NES and LFS earnings data’, Labour Market Trends,May 1998.

Notes

1 Economies are seen to go through what is called a business cycle in terms of economic growth and decline.Thus business cycles are repeated movements,such as boom and slump,that occur through time. Cyclical unemployment represents those jobs lost through a decline or recession in the business cycle.By contrast,structural change refers to long-term or once-and-for-all changes.Structural unemployment refers to the occurrence of long-termunemployment caused by long-term shifts in the nature of production in the economy.

2 ‘Frictional’ unemployment refers to those people unemployed because they are changing jobs,searching for jobs or taking a break before starting with anew employer.There is likely to be some frictional unemployment even when there is technically full employment.


0

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4

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6

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8

20032002200120001999

Figure Average usual weekly paid overtime hours worked; United Kingdom; spring

quarters 1999 to 20035Hours

All other

occupationgroups

Skilled

constructiontrades

Skilled

metaltrades





Technical note

Employers Skill Survey vacancy dataIn autumn 1999 the Department for Education and Skills

(DfES) commissioned an Employers Skill Survey (ESS1999) to

inform the National Skills Task Force about the skill deficiencies

in the labour market. There was a second survey in 2001

(ESS2001), a smaller survey in 2002 (ESS2002) and a National

Employers Skill Survey in 2003 (NESS2003) which was the largest

of all.

They are establishment-level surveys covering England.

ESS2001 consisted of a total of 27,031 telephone interviews

across all sectors and all size bands, in contrast with the ESS1999,

which did not include workplaces with fewer than five

employees.NESS2003 involved 72,100 interviews.

The occupational dataset contains information on vacancies,hard-to-fill vacancies and skill-shortage vacancies. Skill-shortage

vacancies are hard-to-fill vacancies owing to the low number of

applicants with the required skills, lack of work experience or

lack of qualifications the company demands.

Skill-shortage vacancies are presented as the total number of

such vacancies for each occupation,in their density (ratio of skill-

shortage vacancies to total employment), and in their intensity

(proportion out of total vacancies – more indicative of the skill-

related problem).

Jobcentre Plus vacancy data Jobcentre vacancy statistics are obtained as a by-product of

the administrative computer system of the former Employment

Service (now part of Jobcentre Plus) and are published monthly.

Vacancies are job openings notified by an employer to a

Jobcentre. A notified vacancy is one that has been notified within

a particular statistical month (in-flow). An unfilled vacancy is one

that not been filled at the end of the month (stock). Self-

employed vacancies require the jobholder to pay their own tax

and National Insurance contributions. Since March 1999 data

only cover Great Britain because of problems identified during

the introduction of a new system of processing vacancies in

Northern Ireland.

The change from SOC90 to SOC2000 made a specific impact

on the vacancy statistics and the majority of the occupational

classification of vacancies was suspended for two quarters (those

ending October 2000 and January 2001), so comparisons withprevious data are difficult.

The publication of Jobcentre vacancy statistics since May 2001

was deferred due to distortions in the data caused by the

introduction of a new way of handling vacancies within Jobcentre

Plus. Publication of some notified vacancy statistics (in-flows), on

an unadjusted basis, was resumed from June 2002, although not

as National Statistics. The figures from June 2002 onwards arenot comparable with the original series (see Arrowsmith (2003)

for more details).

The Vacancy Survey, a new series of National Statistics, does

not provide a breakdown by occupation.

NES and LFS income dataThe New Earnings Survey (NES) is the main source of

earnings data in Great Britain (and UK when added to an

equivalent Northern Ireland survey). It has sampled 1 per cent of

employees (around 150,000) since April 1970, which allows for

very disaggregated information on earnings to be produced. LFS

questions on earnings were introduced for a fifth of the sample

(around 9,000 employees) in the winter quarter of 1992/93, and

the sample was doubled from 1997 to improve the accuracy of

the data.The NES focus is on jobs, and the data are provided by

employers from their payroll records.The LFS focuses primarily

on individuals in employment and information is collected from

individuals.

The NES provides a detailed breakdown of earnings into its

main components: overtime, profit-related pay incentive

payments, shift premium payments, and basic pay and all other

payments.By contrast, a single gross earnings measure is available

from the LFS.The main limitation of the NES is that it covers

primarily pay-as-you-earn (PAYE) records, so there is significant

underrepresentation of employees earning below the weekly

PAYE threshold. NES earnings are consistently higher than from

the LFS because of the systematic underreporting in the latter,but this is more acute for part-timers than for full-time

employees (see Wilkinson (1998) for more detail).

Comparisons between NES and LFS data on full-time earnings

should be more meaningful for the selected occupations under

discussion here than for the average occupation. According to

the spring 2003 LFS, there is a much higher proportion of full-

timers (over 97 per cent and 96 per cent for groups 52 and 53

respectively, compared with over 72 per cent on average for the

rest of occupations). This means that most workers in these

groups are covered.Probably as a result of this,the proportion of

workers with second jobs is actually lower for these

occupational groups (2.1 per cent and 1.5 per cent compared

with an average of 4.3 per cent).Therefore, for these groups it isreasonable to compare weekly earnings on main job from LFS

data with NES data on jobs (which includes main job, second,

third and so on).Also,LFS data in 2000 show that the proportion

of workers for which income tax is not deducted is much lower

in these occupations (1.5 per cent and 4.8 per cent, compared

with a remaining average of 8.9 per cent).

skills shortages tcm77-160052

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